The U.S. Federal Reserve has released minutes of the December meeting, providing more details on its interest hike decision. Fed officials expressed growing concerns during the Federal Open Market Committee meeting, according to the minutes released on Wednesday afternoon.
Some of the concerns raised by the officials include uncertain global growth prospects, volatility in financial markets, and escalating trade tensions. They acknowledged that these concerns made the future path of interest rate raises “less clear.”
“With an increase in the target range at this meeting, the federal funds rate would be at or close to the lower end of the range of estimates of the longer-run neutral interest rate, and participants expressed that recent developments, including the volatility in financial markets and the increased concerns about global growth, made the appropriate extent and timing of future policy firming less clear than earlier,” the minutes said.
The minutes also show that “a number” of the officials believe the Federal Reserve should assess how those risks that had “become more pronounced in recent months might unfold” and how they are likely to impact economic activity.
The policy makers believe that they could afford to be “patient” about future interest rate increases if the economy remains strong. “Many participants expressed the view that, especially in an environment of muted inflation pressures, the committee could afford to be patient about further policy firming,’’ the central bank said in the minutes.
The central bank approved hiked interest rate by a quarter point to a range of 2.25% to 2.5%, the fourth increase for the year. But the minutes revealed that a “few” officials argued against raising the rates at the gathering.
The Jerome Powell-led Federal Reserve also pruned its projection of potential rate increases this year from three down to two. However, some analysts believe the bank could end up hiking rates just once if the U.S. economy suffers a significant slowdown.